Real Estate Firms Consider IPOsThree Chinese real estate companies are expected to list on the Shanghai or Shenzhen stock exchanges this year.They are the first to consider initial public offerings (IPOs) since the central government imposed a ban on real estate company IPOs in 1995. Reliable sources said the Ministry of Construction has recommended that the three firms be allowed to apply for IPOs, and related departments have approved the offerings, but the companies involved have not been named. "Allowing real estate companies' to list on the stock market is one of the most important measures in the regularization of China's real estate markets," said Yin Weihong of the Beijing Achievement Commerce and Investment Consultants Co Ltd. "It will help stimulate the country's real estate sector." An inflow of money to strong-performing real estate developers will help improve the quality of buildings, which will benefit ordinary residents, she said. Hu Jiafang, vice-president of the Vantone Industrial Group Co Ltd, said the move is a good news for real estate companies, because a shortage of money is an obstacle for real estate development. But some experts and developers hold different views. "The IPO will not bring too much money for real estate developers, because many shareholders do not have confidence in the country's stock market," said Ding Yi of Beijing Joinland Investment Consulting Co Ltd. Her view was shared by Pan Shiyi, president of Zhong Hong Tian Real Estate Co Ltd, who said China's stock market should be wholly market-oriented. "It is the stock market that decides which company can be listed," he said. Pan's remarks hinted that the IPO should not be recommended by the Ministry of Construction, otherwise, it will be like what happens under a planned economy, property analysts said. They said the three companies being considered are all State-owned companies burdened with financial difficulties. "The stock markets should be responsible to shareholders," Pan said. Moreover, practices in Hong Kong and Singapore, where many real estate companies are allowed to list on stock markets, are not well suited to China's situation, Pan said. Instead, China should establish real estate funds and list such funds on the stock market to pool needed capital for the sector. |
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